Solis v. SCA Restaurant Corp. et al

Filing 56

MEMORANDUM AND OPINION. IT IS HEREBY ORDERED that, for the reasons set forth in the attached Memorandum and Order, defendants' request that the automatic stay arising under Section 362 of the Bankruptcy Code be found to apply to this action is denied. The action is exempt from the automatic stay under the police and regulatory powers exemption set forth in Section 362(b)(4) of the Bankruptcy Code. SO ORDERED. Ordered by Judge Joseph F. Bianco on 12/1/2011. (Weber, Rebecca)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_____________________
No 9-CV-02212 (JFB) (ETB)
_____________________

HILDA L. SOLIS, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR
Plaintiff,
VERSUS

SCA RESTAURANT CORP. D/B/A LUIGI Q ITALIAN RESTAURANT, A CORPORATION
AND LUIGI QUARTA, INDIVIDUALLY AND AS OWNER
Defendants.

___________________
MEMORANDUM AND ORDER
December 1, 2011
___________________

JOSEPH F. BIANCO, District Judge:
This action was commenced by plaintiff
Hilda L. Solis, Secretary of the United
States Department of Labor (“DOL”),
pursuant to Sections 16(c) and 17 of the Fair
Labor Standards Act (“FLSA”), 29 U.S.C.
§§ 201, et seq. Defendant Luigi Quarta
(“Quarta”), the owner of defendant SCA
Restaurant Corp., is in the midst of a
Chapter 7 bankruptcy proceeding, and
contends that the automatic stay arising
under Section 362 of the Bankruptcy Code
serves to stay the instant action. For the
reasons stated below, the Court finds that the
government may proceed with its FLSA
claim against defendant Quarta under the
police and regulatory powers exemption to

the automatic stay, pursuant to 11 U.S.C. §
362(b)(4). 1
I. BACKGROUND
In a complaint filed against Quarta and
SCA Restaurant Corp. on May 21, 2009, the
DOL alleges that defendants violated
Sections 7 and 15(a)(2) of the FLSA by
failing to pay minimum wage and overtime
compensation to the employees of SCA
Restaurant Corp., and that defendants
violated Sections 11(c) and 15(a)(5) of the
FLSA by failing to keep full and accurate
records concerning their employees’ wages,
1

The automatic stay issue does not relate to the other
defendant, SCA Restaurant Corp., because the
corporate defendant has not filed for bankruptcy and,
in any event, there is no basis to stay the action as to
the corporate entity.

hours, and conditions of employment. 29
U.S.C. §§ 207, 211(c), 215(a)(2), 215(a)(5).
The DOL sought an injunction pursuant to
Section 17 of the FLSA permanently
restraining defendants from violating
Sections 7, 11(c), 15(a)(2), and 15(a)(5) of
the FLSA, and an order pursuant to Section
16(c) finding defendant liable for unpaid
overtime compensation and an equal amount
of liquidated damages.

component of a bankruptcy petition, as it
“provides the debtor with a breathing spell
from his creditors” and “allows the
bankruptcy court to centralize all disputes
concerning property of the debtor’s estate in
the bankruptcy court so that reorganization
can proceed efficiently, unimpeded by
uncoordinated proceedings in other arenas.”
Shugrue v. Air Lines Pilots Ass’n, Int’l (In re
Ionosphere Clubs, Inc.), 922 F.2d 984, 989
(2d Cir. 1990) (internal citations and
quotation marks omitted).

After the DOL filed the instant suit,
Quarta filed for voluntary bankruptcy under
Chapter 7 of the Bankruptcy Code in the
Eastern District of New York. In the instant
motion, Quarta urges the Court to find that
the DOL’s action is stayed under the
automatic stay provision pursuant to Section
362 of the Bankruptcy Code.

Section 362(b)(4) of the Bankruptcy
Code provides an exception to the automatic
stay for actions by a governmental unit to
enforce its police or regulatory power.
Specifically, it provides that the filing of a
bankruptcy petition does not operate as a
stay against:

II. LEGAL STANDARDS
commencement or continuation of an
action or proceeding by a
governmental unit . . . to enforce
such
governmental
unit’s
or
organization’s police and regulatory
power, including the enforcement of
a judgment other than a money
judgment, obtained in an action or
proceeding by the governmental unit
to enforce such governmental unit’s
or organization’s police or regulatory
power.

Under 11 U.S.C. § 362(a)(1), the filing
of a bankruptcy petition automatically stays
the commencement or continuation of
judicial proceedings against the debtor. 2 See
E. Refractories Co. Inc., v. Forty Eight
Insulations, Inc., 157 F.3d 169, 172 (2d Cir.
1998). The automatic stay is a fundamental
2

Section 362(a) provides, in relevant part:
Except as provided in subsection (b) of
this section, a petition filed under
section 301, 302, or 303 of this title, or
an application filed under section
5(a)(3) of the Securities Investor
Protection Act of 1970, operates as a
stay, applicable to all entities, of— (1)
the commencement or continuation,
including the issuance or employment
of process, of a judicial, administrative,
or other action or proceeding against the
debtor that was or could have been
commenced before the commencement
of the case under this title, or to recover
a claim against the debtor that arose
before the commencement of the case
under this title . . . .

11 U.S.C. § 362(b)(4). As the Second
Circuit explained, “the purpose of this
exception is to prevent a debtor from
frustrating
necessary
governmental
functions by seeking refuge in bankruptcy
court.” SEC v. Brennan, 230 F.3d 65, 71 (2d
Cir. 2000) (internal quotation and citations
omitted). “Thus, ‘where a governmental unit
is suing a debtor to prevent or stop violation
of
fraud,
environmental
protection,
consumer protection, safety, or similar
police or regulatory laws, or attempting to
fix damages for violation of such a law, the
2

Other courts have backed away from the
“pecuniary purpose” test, and apply a
broader “pecuniary advantage” test. United
States v. Commonwealth Cos. (In re
Commonwealth Cos.), 913 F.2d 518, 523-25
(8th Cir. 1990); see also United States ex
rel. Jane Doe 1 v. X, Inc., 246 B.R. 817, 820
(E.D. Va. 2000). Under the “pecuniary
advantage” test, the relevant inquiry is not
whether the governmental unit seeks
property of the debtor’s estate, but rather
whether the specific acts that the
government wishes to carry out would create
a pecuniary advantage for the government
vis-à-vis other creditors. See Commonwealth
Cos., 913 F.2d at 523; Jane Doe 1, 246 B.R.
at 820. Thus, the “pecuniary advantage”
analysis has been used as an alternative
formulation of the first test.

action or proceeding is not stayed under the
automatic stay.’” Id. (quoting H.R. Rep. No.
95-595 at 343).
In attempting to apply the § 362(b)(4)
exception, courts look to the purposes of the
law that the government seeks to enforce to
distinguish between situations in which a
“state acts pursuant to its ‘police and
regulatory power,’ and where the state acts
merely to protect its status as a creditor.”
Safety-Kleen, Inc. v. Wyche (In re
Pinewood), 274 F.3d 846, 865 (4th Cir.
2001) (quoting Universal Life Church, Inc.
v. United States (In re Universal Life
Church, Inc.), 128 F.3d 1294, 1297 (9th Cir.
1997)); United States ex rel. Fullington v.
Parkway Hosp., Inc., 351 B.R. 280, 282-83
(E.D.N.Y. 2006). Two tests have been
historically applied to resolve this question:
(1) the “pecuniary purpose” test (also known
as the “pecuniary interest” test), and (2) the
“public policy” test. See In re Methyl
Tertiary Butyl Ether (“MTBE”) Products
Liab. Litig., 488 F.3d 112, 133 (2d Cir.
2007); Universal Life Church, 128 F.3d at
1297; Parkway Hosp., 351 B.R. at 283; see
also In re Chateaugay Corp., 115 B.R. 28,
31 (Bankr. S.D.N.Y. 1988). Under the
pecuniary purpose test, a court looks to
whether a governmental proceeding relates
to public safety and welfare, which favors
application of the stay exception, or to the
government’s interest in the debtor’s
property, which does not. See MTBE, 488
F.3d at 133; Lockyer v. Mirant Corp., 398
F.3d 1098, 1108-09 (9th Cir. 2005). “If it is
evident that a governmental action is
primarily for the purpose of protecting a
pecuniary interest, then the action should not
be excepted from the stay.” Eddleman v.
U.S. Dep’t of Labor, 923 F.2d 782, 791
(10th Cir. 1991), overruled in part on other
grounds by Temex Energy, Inc. v.
Underwood, 968 F.2d 1003 (10th Cir. 1992).

The second test – namely, the public
policy test – distinguishes “‘between
proceedings that adjudicate private rights
and those that effectuate public policy.’”
Chao v. Hosp. Staffing Servs., Inc., 270 F.3d
374, 385-86 (6th Cir. 2001) (quoting In re
Commerce Oil Co., 847 F.2d 291, 295 (6th
Cir. 1988)); see Eddleman, 923 F.2d at 791.
An action may further both public and
private interests. Where “an action furthers
both public and private interests,” reviewing
courts should exempt the action from the
automatic stay if “the private interests do not
significantly outweigh the public benefit
from enforcement.” Chao, 270 F.3d at 390.
The tests are overlapping to some extent,
and there also appears to be some confusion
in the case authority as to whether both the
pecuniary test and the public purpose test
must be satisfied for an action to be
exempted, or whether one is sufficient. In
fact, the Ninth Circuit has discussed this
specific issue. Compare Lockyer v. Mirant
Corp., 398 F.3d at 1108 (“A suit comes
within the exception of § 362(b)(4) if it
satisfies either test.”) with City & Cnty. of
3

test is utilized – as well as the “public
policy” test. See, e.g., In re Trinity Meadows
Raceway, Inc., Adversary No. 06-04165,
2007 WL 2713920, at *6 n.29 (N.D. Texas
Sept. 11, 2007) (“Although it is not clear
whether a governmental unit must pass
either or both tests, the inquiry is
inconsequential because, as the court
addresses below, Defendants’ actions pass
both the pecuniary interest and public policy
tests.”).

S.F. v. PG&E Corp., 433 F.3d 1115, 1125
n.11 (9th Cir. 2006) (“Our controlling
precedent, as we have discussed, quite
plainly states satisfying either the ‘pecuniary
interest’ or ‘public policy’ test will suffice.
That being said, ‘[v]iewing the tests as
disjunctive perhaps does not always make
sense, however.’”) (quoting Fed. Trade
Comm’n v. First Alliance Mortg. Co. (In re
First Alliance Mortg. Co.), 264 B.R. 634,
647 n.11 (Bankr. C.D. Cal. 2001)); see also
Eddleman, 923 F.2d at 791 (“In the case at
bar, we conclude that DOL’s enforcement
proceedings are exempt from the stay under
either test.”); Massachusetts v. New England
Pellet, LLC, 409 B.R. 255, 259 (D. Mass.
2009) (“If either test is satisfied the case is
considered an enforcement action.”)

III. DISCUSSION
A. Pecuniary Purpose or Pecuniary
Advantage Test
First, the instant case is exempt from the
stay under the pecuniary purpose or interest
test, as well as the pecuniary advantage
test. 3

The Second Circuit has not yet ruled on
which test to apply. See MTBE, 488 F.3d at
133 (“we do not find it necessary to pass on
the validity of these tests at this time”); Fed.
Trade Comm’n v. Consumer Health Benefits
Ass’n, 10-CV-3551 (ILG), 2011 U.S. Dist.
LEXIS 61305, at *9 (E.D.N.Y. June 8,
2011) (“The Second Circuit has yet to pass
on the validity of any particular test.”). In a
prior opinion, this Court held that the
pecuniary advantage test, rather than the
pecuniary interest test, should be utilized.
See Parkway Hospital, 351 B.R. at 286
(“The Court agrees that the pecuniary
advantage test is the appropriate standard to
apply
regarding
the
§ 362(b)(4)
exception . . . .”).

With respect to the pecuniary purpose or
interest test, the government has no
pecuniary interest in defendants’ estate. See
Eddleman, 923 F.2d at 791 (“DOL’s pursuit
of debarment and liquidation of back-pay
claims” was not “designed to advance the
government’s pecuniary interest,” but rather
was intended “primarily to prevent unfair
competition in the market by companies
who pay substandard wages.”); Martin v.
Safety Elec. Const. Co., 151 B.R. 637, 639
(D. Conn. 1993) (DOL action seeking
injunction and monetary damages for
violations of minimum-wage provisions of
the FLSA was “not designed to advance the
government’s pecuniary interest”). The

However, in an abundance of caution,
the Court has examined the facts of this case
under each of the above-referenced tests and
concludes, for the reasons set forth below,
that the § 362(b)(4) exception applies in the
instant case regardless of which test is
utilized. In other words, the instant lawsuit
is exempt from the automatic stay under
both the first test – whether the “pecuniary
purpose” test or the “pecuniary advantage”

3

Defendants concede in their opposition papers that
the government satisfies this first test because the
government will not obtain a pecuniary advantage in
Bankruptcy Court, and simply argue that the public
policy test is not satisfied. See Defs.’ Opp. at 3-4
(“As this Court applied the pecuniary interest test in
Fullington, the government – as an unsecured
creditor – satisfies this test since it will not obtain a
pecuniary advantage in the Bankruptcy Court.”)
(footnote omitted).

4

competition in the market from companies
who pay substandard wages.” Chao v. BDK
Indus., LLC, 296 B.R. 165, 168 (C.D. Ill.
2003). Moreover, should the DOL succeed
in obtaining a money judgment against the
defendant, such a judgment could deter
unlawful behavior by others. See Parkway
Hosp., 351 B.R. at 287 (“the imposition of
financial liability on a party deters unlawful
behavior and thus serves the police and
regulatory efforts of the government”).
Thus, this Court holds that actions
undertaken by the DOL to enforce wage and
hour protections fall squarely within the
§ 362(b)(4) exemption.

government seeks an injunction to prevent
further violations of the FLSA, as well as
liquidated damages equal to the amount of
the
employees’
unpaid
overtime
compensation. If the government succeeds,
the DOL will not obtain title to any goods,
nor be able to enforce a monetary judgment
against defendants. See Chao v. Mike &
Charlie’s Inc., No. Civ.A. H-05-1780, 2006
U.S. Dist. LEXIS 2178, at *8 (S.D. Tex. Jan.
4, 2006) (“The Secretary would not obtain
title to any goods nor be able to enforce a
money judgment. These remedies are not
designed to advance the government’s
pecuniary interest.”); Martin, 151 B.R. at
639 (“individuals claiming unpaid wages
will not receive any extra priority by virtue
of this action” since “collection of the back
pay and liquidated damages claims must
proceed according to normal bankruptcy
procedures”).

Although never addressed by the Second
Circuit, numerous courts have reached a
similar conclusion in analogous cases. For
example, in Eddleman v. U.S. Dep’t of
Labor, the DOL filed an administrative
action against a mail-hauling business that
worked under a contract with the United
States Postal Service. The DOL alleged
violations of the Service Contract Act
(“SCA”), 41 U.S.C. §§ 351-358, now 41
U.S.C. §§ 6701-6707, which requires federal
government contractors to pay certain
minimum wages and benefits, and to keep
adequate records of hours worked and wages
paid. 923 F.2d at 783. The DOL sought to
liquidate claims for back wages owed to the
Eddlemans’ employees, and to put the
Eddlemans on a list of SCA violators, which
would debar them from contracting with the
government for three years. Id.

For the same reasons, the action at issue
passes the broader pecuniary advantage test.
Should the government succeed in winning a
monetary judgment against defendants,
enforcement of the money judgment will
take
place
in
bankruptcy
court.
Consequently, the suit’s monetary claims
would be subject to bankruptcy procedures
just like any other claim against the debtor,
and would not, therefore, confer any
advantage on the government vis-à-vis other
creditors.
B. Public Policy Test
The DOL’s action also satisfies the
public policy test. The action enforces the
DOL’s regulatory powers under the FLSA –
specifically,
ensuring
that
covered
employees receive minimum wage and
overtime compensation, and that employers
maintain proper wage and hour records. The
injunction sought by DOL would serve to
prevent further violations, protect labor
conditions, and prevent “unfair labor

In the Eddleman case, the Tenth Circuit
held that the DOL action was exempt from
the automatic stay under § 362(b)(4). Id. at
791. The “public policy” test presented “no
barrier” to the DOL action because seeking
back pay on behalf of specific individuals
was not “an assertion of private rights.” Id.
Instead, it was a method of “enforcing the
policies underlying the SCA.” Id. This was
especially true because back-pay claimants
5

would not receive any extra priority as a
result of the DOL action, since collection of
the claims would proceed in bankruptcy
court. Id.

Secretary is suing under the government’s
police power, his suit is exempted from the
automatic stay provision.”) (footnote
omitted).

Although the violations at issue in
Eddleman concerned the SCA and not the
FLSA, both acts seek to ensure that
employers pay their employees in
accordance with overtime and minimum
wage laws, and that they keep adequate and
accurate records reflecting those payments.
Accordingly, the same analysis would apply
in determining whether an action concerning
unpaid minimum wages or overtime
compensation satisfies the relevant tests,
regardless of whether the action is brought
pursuant to the SCA or the FLSA.

Indeed, a number of district courts have
also ruled that suits by the Secretary seeking
to enjoin defendants from violating the
FLSA’s minimum wage, overtime, and
record-keeping requirements, and seeking
liquidated damages for those violations, fall
within the police and regulatory power
exemption from the automatic stay. See
Martin, 151 B.R. at 639 (DOL action
seeking injunction and monetary damages
for violations of minimum-wage provisions
of the FLSA was exempt from stay because
the remedies acted as a mechanism to
enforce the policies underlying the FLSA,
and because the employees would not
receive priority over other creditors); Martin
v. Chambers, 154 B.R. 664, 667 (E.D. Va.
1992) (action seeking injunction and
damages was exempt from stay because it
was brought pursuant to DOL’s “mandate to
regulate and enforce fair labor standards”);
Dole v. Sears, No. 88-6160-CV-SJ-8, 1989
U.S. Dist. LEXIS 15149, at *2 (W.D. Mo.
June 16, 1989) (FLSA action seeking
injunction
and
damages
was
“unquestionably an exercise of police or
regulatory powers”); see also Chao v. Mike
& Charlie’s Inc., 2006 U.S. Dist. LEXIS
2178, at *7-8 (DOL action seeking to enjoin
future minimum-wage violations of the
FLSA was exempt from stay); BDK Indus.,
LLC, 296 B.R. at 170 (DOL action seeking
to enjoin future minimum-wage violations
of the FLSA was exempt from stay because
the primary purpose of the action was “to
protect workers and to prevent unfair
competition in the market by companies
who pay substandard wages”); Donovan v.
Health Care Res., Inc., 44 B.R. 546, 547
(W.D. Mo. 1984) (DOL action seeking to
enjoin future minimum-wage violations of
the FLSA “constitute[d] an exercise of

Defendant
seeks
to
distinguish
Eddleman, arguing that while the DOL’s
pursuit of liquidated damages was an
assertion of private rights that would not,
accordingly, pass the public policy test, the
Eddleman court exempted the action from
the automatic stay because DOL also sought
an injunction debarring the defendants from
contracting with the government. Yet the
Eddleman court made clear that the public
policy test “present[ed] no barrier to DOL’s
actions,” because the liquidation of back-pay
claims was not an assertion of private rights,
but was “another method of enforcing the
policies underlying the SCA.” Id. at 791.
Moreover, in the action at bar, the DOL does
not seek only liquidated damages, but also
an injunction preventing further violations
of the FLSA. Thus, the Eddleman case is
directly on point and this Court finds the
analysis persuasive. See also Brock v.
Rusco Indus., 842 F.2d 270, 273 (11th Cir.
1988) (“We believe that the Secretary
brought this suit under his police power. The
Secretary brought this suit to protect
legitimate
businesses
from
unfair
competition and to enforce the federal law
regarding minimum wage. Since the
6

had allegedly produced at a competitive
disadvantage by paying employees a
substandard wage. The Secretary sought an
injunction to prevent the records from
moving in interstate commerce. 270 F.3d at
378.

police or regulatory powers” and was
therefore exempt from stay).
Courts have also applied the police and
regulatory power exemption to analogous
actions by federal agencies to enforce labor
and employment statutes. See, e.g., NLRB v.
15th Ave. Iron Works, Inc., 964 F.2d 1336,
1337 (2d Cir. 1992) (per curiam) (NLRB
unfair labor practice and enforcement
proceedings exempt from stay under
§ 362(b)(4)); NLRB v. Cont’l Hagen Corp.,
932 F.2d 828, 835 (9th Cir. 1991) (NLRB
action seeking back-pay and other relief
exempt from stay); Pension Benefit Guar.
Corp. v. LTV Corp., 875 F.2d 1008, 1020
(2d Cir. 1989) (decision to restore full
liability after corporation terminated pension
benefit plans was exempt from stay), rev’d
on other grounds, 496 U.S. 633 (1990);
NLRB v. Edward Cooper Painting, Inc., 804
F.2d 934, 942-43 (6th Cir. 1986) (NLRB
action seeking union members’ lost wages
exempt from stay); EEOC v. Rath Packing
Co., 787 F.2d 318, 324-25 (8th Cir. 1986)
(EEOC employment discrimination action to
recover back pay exempt from stay);
Parkway Hosp., 351 B.R. at 288-89 (DOL
action under False Claims Act exempt from
stay because deterring fraud serves an
important public policy purpose).

The Sixth Circuit held that the suit was
not exempt from the automatic stay. Id. at
394. In particular, the court concluded that
the suit did not pass the public policy test
because it was brought primarily to assert
and protect the private rights of certain
individuals. Id. at 393-94. The court
explained that, although some “hot goods”
cases would qualify for an exemption, this
particular suit concerned medical records
relating to services already rendered by
employees, so the suit would not prevent
unfair competition in the marketplace. Id. at
392. Moreover, a successful suit by the
Secretary would result in an injunction that
would require the debtor to pay the
employees’ wages in order to “free” the
goods. In the court’s view, this requirement
created “a significant property interest” in
the debtor, and enforcing an injunction to
obtain that property interest would function
as a “vehicle to enforce the private rights of
the employees” to their wages.” Id. at 39394.
The Chao case is clearly distinguishable
from the instant case. First, the Sixth
Circuit’s holding in Chao (as noted above)
was
based
upon
the
“peculiar
circumstances” of that case where the “hot
goods” relief sought did not (in the court’s
view) trigger the FLSA’s concern about
preventing unfair competition in the
marketplace. 270 F.3d at 382. In contrast,
the instant case is not a “hot goods” case;
rather, the DOL seeks an injunction pursuant
to Section 17 against further violations of
the FLSA, as well as liquidated damages
under Section 16(c). Those types of relief
undoubtedly implicate a “public policy”

Defendants’ heavy reliance upon the
Sixth Circuit decision in Chao v. Hospital
Staffing Services is entirely misplaced. The
Chao case addressed the narrow issue of
whether an action seeking an injunction
under Section 17 of the FLSA to prevent
“hot goods” from entering the market is
exempt from the automatic stay. See Chao,
270 F.3d 374. “Hot goods” are goods
produced by employees who were paid
below the minimum wage. In the Chao
case, the Secretary of the Department of
Labor brought a “hot goods” action under
the FLSA to prevent the dissemination of
business records that the debtor employer
7

interest.
In fact, the Sixth Circuit
recognized the “important continuing public
interest in restraining future violations of the
FLSA’s minimum wage and overtime
provisions” and the “significant public
interest in protecting other businesses from
unfair competition” in distinguishing the
peculiar “hot goods” situation from other
situations. Id. at 392. (“In this particular
case, however, that significant public
interest in protecting other businesses from
unfair competition is not present because the
‘goods’ are merely records relating to
services already rendered by employees.”). 4
Moreover, to the extent that the Sixth Circuit
in Chao may have been concerned that the
“hot goods” relief sought could under the
circumstances of that case force actual
payment of back wages outside of the
bankruptcy process (id. at 393), no such
concern exists in the instant case, since any
judgment for damages entered against the
defendant would be resolved in Bankruptcy
Court.

IV. CONCLUSION
For the foregoing reasons, defendants’
request that the automatic stay arising under
Section 362 of the Bankruptcy Code be
found to apply to this action is denied. This
action is exempt from the automatic stay
under the police and regulatory power
exception set forth in Section 362(b)(4) of
the Bankruptcy Code.
SO ORDERED.

________________________
Judge Joseph F. Bianco
United States District Judge

Date:

December 1, 2011
Central Islip, NY
*

*

*

Plaintiff is represented by Daniel M.
Hennefeld and Elena S. Goldstein, U.S.
Department of Labor, Office of the Solicitor,
201 Varick Street, Room 983, New York,
N.Y. 10014. Defendant is represented by
Raymond Nardo, 129 Third Street, Mineola,
N.Y. 11501.

In sum, the DOL brings this action under
Sections 16(c) and 17 of the FLSA to serve
the valid public policy purposes of enjoining
further violations of the FLSA, protecting
labor
conditions,
preventing
unfair
competition in the labor market, and
deterring unlawful behavior by others.
Successful prosecution of this action will not
create a pecuniary interest for the
government in the debtor’s property, nor
will it result in a pecuniary advantage to the
government
over
other
creditors.
Accordingly, this action is exempt from the
automatic stay under § 362(b)(4), the police
and regulatory power exemption.

4

The Court notes that the Eleventh Circuit has found
an exemption to the automatic stay to exist even in
the context of a “hot goods” case. See Brock v. Rusco
Indus., 842 F.2d at 271-73.

8